Does your contents insurance fully cover theft?

Home and contents insurance is a mandatory purchase for many home owners, and lately there has been a lot of interest in flood cover in particular following the Queensland disaster at the beginning of the year. However, a recent letter from a CHOICE member George* has highlighted another area of potential confusion – theft.

Contents insurance policies typically include theft cover in case you’re robbed, but there are a couple of common tricks and traps that can reduce your claim or void it completely.

“We discovered on the weekend we were surreptitiously burgled. The thief stole a lifetime collection of valuable gold and diamond jewellery conservatively estimated at $20,000 in total. I found out the maximum my insurance will give me is $4,900 (minus excess) – much less than my loss,” George said.

George did most things right; his insurance was up to date, the jewellery was stored away safely, he filed a police report as soon the loss was discovered, he had photo evidence and even valuations. The problem occurred because most policies place limits on high-value items, unless you specifically apply for a higher limit. Doing this will probably affect your premium, but in the event of a claim, it’s usually worth it.

The story doesn’t end there, either. “I may have a fight on my hands. There was no sign of forced entry, which means the insurer may deny my claim on the basis I invited the thief onto my property at some point. Although, the assessor told me thieves can bypass some locks, so hopefully my claim will still be paid,” George said.

About three quarters of the policies we reviewed in our last home and contents insurance comparison said they will not provide cover (although some review on a case-by-case basis) if the thief enters with the owner’s consent. This means a guest at a party, any maintenance workers or even someone who enters with a real estate agent could invalidate your theft cover if there’s no clear sign of smash and grab.

*George’s case is ongoing so we can’t give his real name or further details of his situation, but it doesn’t change the message. To take full advantage of your insurance, you need to have your contents covered at their full financial value. If you have high-value individual items, consider a policy that doesn’t restrict how a thief enters the property or otherwise be aware of your policy limitations so you can take appropriate precautions, such as installing a safe or keeping valuables like jewellery is a safety deposit box in a bank.

Were you aware that most contents insurance policies will not cover theft if you invited the thief onto the property? Have you found out about exceptions and limitations around theft the hard way? Read our advice to make sure you’re fully covered.